musings from 35 yr AZ resident and Realtor®

According to Arizona Revised Statute 28-448 a person is required to notify the Arizona Department of Motor Vehicle (DMV) within 10 days (calendar days, not business days) of an address or name change. A violation of this is considered a civil traffic violation. At the very least a civil traffic violation could be a hassle to get removed or could cost you a lovely Saturday in traffic school or up to a $250 fine.

There are several acceptable ways to notify the DMV of your address change. You can do it the traditional ways by driving down to your closest DMV office, calling or mailing in your current information. The easiest way to update your current address with the Arizona DMV is to go to their website ServiceArizona.com

Screen Shot of Landing Page for Service Arizona

In addition to keeping your Driver’s Licence up to date, you can change your voter registration, renew your vehicle tags, obtain a duplicate Drivers License to be mailed to you, select and order personalized or speciality license plates, check on a license plate credit, obtain a ‘sold notice’ for a recently sold vechile, obtain a vehicle tab replacement and more.

I know there is a lot to think of when your are in the process of moving that is why I send all my clients an email with this link and many other useful information to make getting their new home established as easy as possible.

Excluding certain military personnel, the First Time Home Buyer’s Tax Credit has expired. For all practical purposes we have been left with what amounts to a void in the Phoenix Area Housing Market. I will need to cover this in three parts:

1. A look at the immediate statistical summary and define our current ‘Void’.

2. Project out and take a stab at the future and possible time tables for improvements and the factors that might and will play a role.

3. Take a broader picture of the Housing Recovery in the Greater Phoenix Metropolitan area (this is the good news, so don’t miss this one!).

The Void… The Why

Our Highest Recorded Pending Listings in this century occurred in the week ending April 28, 2010, approximately 1 month prior to the closing deadline for the first-time home buyer tax credit. At the end of April we had 15,149 homes listed as pending or under contract in our Multiple Listing Service (Just for comparison purposes, as of September 13th, 2010 we had 10,009 pending listings). With only 30 days left to get a deal closed, those that were looking to qualify for the tax credit had already made their decisions and had something under contract. In addition, something else occurred that was counter productive to helping our housing market regarding the reporting of these pending listings. Quite a large percentage of buyers had put multiple offers out on properties with the intention of only purchasing one or at least less than what they had made offers on. In their effort to try to ensure they got ‘something’, they opted for the ‘insurance’ of having more than one choice available to them when the time came to choose. When we got down to the wire of having enough time to get a deal closed (typically about 30 days) and they had to choose, many of these duplicate contracts were cancelled. Since April we have obviously seen a dramatic decrease in pending listings. We essentially had a FALSE demand that was created by these multiple contracts. When you have a greater demand, the supply goes down and of course the price goes up, or in this case, more precisely is artificially inflated by a false demand. I can tell you first hand, that buyers were panicked, and here in Arizona we had bidding wars, escalation clauses and in some areas, inventory was down to less than a four month supply which is generally considered a Seller’s market. We essentially had a mini-bubble for a few months. Well, we have learned that bubbles eventually pop, and now that the tax credit is over, our market must now correct…. AGAIN.

The Void… The Data

According the The Cromford Report, the end of August had our current price per square foot for the Greater Phoenix area at $84.44/sqft, down from $91.12/sqft at the end of June. That is a decrease of 7.9% since the tax credit has expired only 2 months prior.

Housing Data for Maricopa county has the current Median Sales price at $123,900 ($132,900 in June of 2010). Prior to last year, which has so far been the bottom of our market for median sales price, the last time our median sales price was at $123,900 or below was in December of 2000.

Inventory is increasing weekly. In the last 3 months, we have added over 3,000 listings to our inventory which now sits at 44,531 up from 41,483. Inventory is up 9% in the last three months.

Three months ago closed sales per month were at 9,312/month. Today closed sales are at 6,911/month. Closed Sales have decreased 25.7% in the last 3 months.

The Void… The Reality

As I speak to my fellow Realtors in the Metro Phoenix area, most listing agents are reporting a huge reduction in their showing activity and price reductions are on the rise for their listings. Buyer agents are consequently reporting buyers that expect ‘everything’. I got the following from an agent with buyers that were seriously considering a listing I have in Power Ranch:

“I was really surprised but I think they [buyers] are just all over the place. I will let you know what the outcome is but you should not have a hard time trying to sell that house. There is just a lot available out there for sale and not a lot of buyers who are serious about buying. I have never seen interest rates as low as they currently are and buyers just seem to want everything and if they can’t have it their way they don’t want it. Pretty fussy buyers with interest rates at their all time low!”

In April of 2009 we reached our lowest median price this decade of $119,000. Since then the market has been trending up for the most part. We had gone from a low of $119,000 in April of 09’ to $134,900 just 12 months later in April of 10’. The press had started to report things were looking up, and we started to hear some positive things happening in the housing market. In just two months since the First Time Home Buyer’s Tax Credit has expired, we have almost voided out the last year gains. I suspect we will likely reach that low of $119,000 in Sept. or Oct. of 2010, and unfortunately there is a real possibility that we will trend lower for a new all time low as inventory continues to increase.

in the next part of this series we will take a look at some of the factors that could influence the next 6 – 12 months in the Phoenix market. Of course there will be speculation and I will be relying heavily on some folks that are quite a lot smarter than I. In the third part of this series I will take a broader look at the housing recovery. There is actually quite a lot of good news to report when looking at the broader picture.

Maybe I am just getting old, but it seems that the older <wiser hopefully> I get, the more I realize that some things in life that I thought were black and white, or simplistic are actually multi-faceted, complex organisms. That is they change, evolve, they rarely lend themselves to the same criteria or result repeatedly. Kind of a heavy way to start out a blog post, but it seems the perfect backdrop to a discussion on negotiating.

I recently had a listing that was new to the market and a real ‘gem’ of a property. Pristine condition, superb neighborhood and the seller had equity! We got two significant offers on this home for consideration.

Offer 1: Emailed over with no discussion before-hand. Final net offer (after counters) was $2,500 below asking price (about 1%). 4 week close with a 3 week inspection period. Seller to pay for buyer’s VA appraisal up front, HOA disclosure fees up front. Repairs to be completed 3 days prior to close of escrow. The buyer was putting down less than .5% of the purchase price for their earnest deposit.

Offer 2: Emailed over with 3 discussions prior to writing offer. Final net offer (after counters) was $7,500 below asking price (about 3%). 5 week close with a 10 day inspection period. Earnest money of 1% of purchase price to go hard (be non-refundable) and be released to the seller 1 week prior to close of escrow.

At quick glance the first offer would seem better to most. After all, the seller would net $5,000 more right? Now let me tell you about my seller…

My seller is relocating to a retirement community. She is single now for the first-time in 30 years. She has never sold a home by herself, she has never moved a home by herself. She is overwhelmed by the thought of an inspector coming in and finding things wrong with the home that she won’t be able to take care of. She wonders if she will be able to get everything done in time by herself while working full-time.

We went with the second offer and here is why: The second offer gave my seller the two things she needed,

A Fair Price for her home and

The highest amount of security.

Offer 1 had my seller taking all the riskhoping the seller would still want the home in 3 weeks when their inspection period was over. My seller was scared of starting to pack up her household and make plans to secure another place to live (deposits, moving vans, etc – more money risked up front) while the buyer could back out. Remember my seller works full-time, so packing up her home is a HUGE undertaking for her. A three week inspection period with a 4 week close left her one week to pack, move, and 4 days to make repair. Not a very nice thing to do to a sweet little old lady.

The buyer’s agent on offer 2 did an excellent job of asking questions and finding out what was important to my seller. She asked a lot of questions. Let me repeat that, she asked a lot of questions. Then she …… listened when I answered her. Now my seller not only has the inspection periods over in a reasonable amount of time, but she had a couple thousand dollars sitting in her bank account before she put money down on moving vans, etc… She had some S.E.C.U.R.I.T.Y and a considerate buyer that was serious about making the transaction work.

When conveying title on a resale home in Arizona the seller will usually convey title with a ‘general warranty deed‘; an exception to this is when that resale home happens to be a foreclosed home. When purchasing a foreclosed home in Arizona, the seller (bank) will offer you a ‘Special Warranty Deed’ instead of a ‘General Warranty Deed’. So what is the difference and how does it effect the purchaser/buyer? Tiffany Malcom, branch manager at Grand Canyon Title in Gilbert, AZ explains what you need to know about a General vs Special Warranty Deed.

A general warranty deed is a promise to the buyer that the seller will warranty any prior problems with title, not just during the seller’s ownership, but back along the chain of ownership.

A special warranty deed, on the other hand, limits the seller’s promise (or warranty) to title problems that come up while the seller owned the property, but gives no warranty for problems prior to that point. They only owned the property long enough to build the homes so they aren’t willing to warrant buyers against something that happened to cloud title before they may have owned the land. Foreclosure property is another example where you often see special warranty deeds. The bank, like the builder, has no close relationship to the property and won’t bend over backwards to promise anything about the condition of title before they acquired the property through foreclosure.

These days, title insurance is the buyer’s best friend. Title insurance insures the buyer against past ownership problems, old liens, boundary issues, and so on. There may be exceptions in the title insurance policy, and owners should know what their exceptions are. For example, without a survey, a title company won’t insure against problems that a survey would have made known — encroachments, for example. That’s an exception and they won’t pay for problems that would have shown up with a survey. But unless there’s a specific exception, any other past title problems are covered.

For any other questions you might have on Title Insurance or Escrow procedures feel free to contact Tiffany Malcom @(480) 831-6066.